- Pound (GBP) extends gains after upbeat BoE comments
- Rate rise possible as soon as early next year
- Euro (EUR) trades lower after weaker than forecast German consumer sentiment data
- Eurozone consumer confidence up next
The Pound Euro (GBP/EUR) exchange rate is extending gains for a third straight session. The pair settled +0.6% higher on Thursday at €1.1645 towards the high of the day. At 05:45 UTC, GBP/EUR trades +0.05% at €1.1650. The pair is set for weekly gain of 0.3%
The Pound rallied in the previous following upbeat comments from Bank of England policy maker Vlieghe. The member of BoE’s Monetary Policy Committee hinted that the central bank could raise interest rates early next year if the UK labour market recovery continues well after the withdrawal of the furlough scheme in September.
Whilst Vlieghe also presented the potential of a more pessimistic outcome the fact the value of the Pound shot higher suggests that investors were focusing on the positive comments.
Adding to the upbeat mood, Prime Minister Boris Johnson said that so far, the UK was still on track for the next stage of the easing of covid restrictions in 21st June. However, covid cases are also on the rise, up 18% over a week as the Indian variant spreads quickly is some acreass of the UK. All eyes will be on the hospital numbers to see whether the vaccine is working.
There is no high impacting UK data due today.
The Euro traded under pressure in the pressure following disappointing German GFK consumer confidence data. Data revealed that consumer morale was set to rise in June to -7 after a depressed May of -8.6. However, this was short of expectations of -5.2.
With covid numbers declining in Germany, the vaccine rollout accelerating and restrictions expected to be eased further in the coming weeks, which should boost consumer optimism further.
Today, Eurozone consumer confidence data will be in focus. Expectations are for consumer confidence to have risen from -8.1 in April to -5.1 in May as the third wave of covid passes and economies reopen.
A better than expected reading could lift the Euro. This is because confident consumers would be expected to spend more boosting the economic recovery.